Oil Forecast 20180801CL
This is the first forecast I’m going to make publically. I have been following the market for a time and I do have many ideas and thoughts that I don’t think will fit into one post. So I will keep it to a simplified version. Keep in mind this is WTI oil I am talking about.
Bullish Factors on the Oil Price
- Political Plays
- US shale oil drillers are finally starting to make money with the current oil prices. This would mean that these producers will lobby for higher prices despite what Trump says.
- Supply disruptions in Iran, Venezuela, Saudi Arabia
- This Russian oil company seems to be taking $60 to $70 oil as the new minimum
- They were being conservative in this estimate too
- Sanctions on Iran might not be as tight as initially feared
- Technical Analysis
- There seems to be a support for oil at the $64 mark
- 126 day Linear Regression Channel shows an uptrend with the 80% percentile marks at $76.5 and $65.5
- Economy
- The global economy is perceived to be strong which means a strong demand for oil
Bearish Factors on Oil Price
- Political Plays
- After OPEC + Russia opened their taps again, there is an over-supply risk
- I do think this is over portrayed as each country will lower supply when it suits them, despite what they say beforehand
- Technical Analysis
- MACD indicates that prices are to go lower
- 30 day Linear Regression Channel shows a start of a downtrend
- Other Charts
- The USD is getting stronger, which will mean the oil will weaken
- This is pretty gradual movement though
- Gold prices have been dropping, a loose indication that commodities like oil are in less demand
- The USD is getting stronger, which will mean the oil will weaken
Other Things of Note
- The demand for oil is strong and still stay strong for the current future, barring any recession
- The future futures contracts are at a lower price than the current futures contract
- Grap between WTI and Brent has closed moderately
The Forecast
- I am 77% confident that the price of WTI oil will not be below $62 on the 18/09/2018.